The Indian government is preparing to make another major change in the banking sector. In many media reports, quoting sources, it was said that the government is considering creating a new mega structure by merging small public sector banks into big banks. After the recommendation of NITI Aayog, work is being done on this proposal at a fast pace and it is expected that in the coming time many small banks of the country can become part of big public banks. After this news, questions are arising in the minds of bank account holders that what will be the effect of this merger on their accounts? Let us know.
What will be the impact on account holders?
Merger of banks can also have a direct impact on customers. For example, after merger, the name of the bank, IFSC code, chequebook, passbook etc. may have to be changed. There is a possibility of delay in services for some time during account migration and data transfer. Along with this, nearby branches of two banks can be merged, which will affect the account holders. However, digital services can become stronger.
Account holders also expect benefits from this. As the security of big banks increases, you can also get the benefit of better digital banking services and more facilities. The government generally ensures that customer hassles are minimized and changes are implemented smoothly.
Which banks can be merged?
Media reports say that the government is considering merging Indian Overseas Bank, Central Bank of India, Bank of India and Bank of Maharashtra into big public sector banks. These can be merged with the following big banks: State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB).
It is being told that initial documents on this proposal have been prepared and it will soon be sent to the Cabinet and PMO. If approved, this mega merger can be completed in the financial year 2026-27.
Why does the government want to make such a big change?
Pressure on small banks has increased in the last few years. The three main reasons for this are increasing expenses, continuous increase in NPA and lagging behind the competition due to small balance sheet. The government wants that banks should be strengthened so that they can not only meet the needs of the country but can also compete at the global level.
What changes will happen after the merger?
It is believed that after the merger, the lending capacity of the banks will increase, the balance sheet will become stronger and technology and management may also improve. With this, operations will become more effective. Even between 2017 and 2020, the government has created 4 big banks by merging 10 banks. Now if the new plan is implemented, only four government banks will be left in the country, SBI, PNB, BoB and Canara Bank.
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